The Internet continues to take its toll—both pro and con—on the U.S. Postal Service, but the post office may be starting to win the fight.

For the first time in several years, the USPS reported an increase in first-class shipments, albeit a nominal one of one-tenth of one percent.

But that's the first time in several years that the USPS didn't report a sharp drop in first-class mail.

About 1.1 billion fewer pieces of snail mail were sent in 2004 compared with 2003, and that's on top of an almost 3.5 billion drop from 2003 compared with 2002 and a 1.3 billion drop from 2002 compared with 2001.

All told, the government's figures last year showed that Americans sent 103.7 billion pieces of first-class mail in 2001 and only 97.9 billion pieces in 2004, a loss of some 5.8 billion pieces of mail or about a 6 percent drop.

In 2005, that number picked up a little ground and closed out the year just shy of 98.1 billion.

The last year—prior to 2005—when the number of first-class mail increased was from 2000 to 2001, when the number of first-class letters sent increased from 103.5 billion to 103.7 billion.

But the first-class story is a lot more complicated than those numbers suggest.

USPS officials attribute that loss overwhelmingly to electronic payments and a consolidation of bills within credit cards, a portion of which are also paid electronically.

"There is a pretty healthy erosion of single-piece mail," said James P. Cochrane, manager of package services for the USPS. "People are finding an alternative way to pay."

Cochrane said USPS officials are still going to try and make a case to businesses and consumers that bill payments through the mail is still a good way, but he concedes it's likely a trend that won't be reversed.

"There might be some opportunities to continue to try and enhance the value of paying by mail. We haven't thrown the towel in on that yet," he said. "The U.S. population prefers to get their bills by paper in the mail."

Other factors causing the decay of first-class single-piece mail include consumers sending personal e-mail instead of letters and the ability of e-mail to handle much larger electronic attachments than just a few years ago.

"We are feeling the pinch of businesses that used to want to send a presentation as Express Mail," he said. "We're all feeling the pinch of what's happened in the overnight document market."

It also isn't helping that the price of a first-class postage stamp is going to increase in January from 37 cents to 39 cents.

The fact that the increase is the first for postage stamps since 2002 may be little comfort to consumers weighing their data communication options.

One small and short-lived bright spot for first-class mail is happening this month: holiday greeting cards, which appear to have not been significantly impacted by e-mail.

"It's a very personal way of acknowledging the holidays," he said, adding that putting printed e-mails on a fireplace mantel doesn't quite feel the same.

The reason the first-class volume increased is that business communications—including the ever-popular mass-mailed unsolicited material otherwise known as junk mail—shot up 3.9 percent, just barely overtaking the regular first-class drop of 3.8 percent and giving first class its one-tenth of 1 percent increase.

"We are very pleased to be in the positive side. That's good news to the postal service," Cochrane said.

The first class segment that increased is officially called workshare, and it covers discounted business mail that businesses process in a particular way to make it easier for the post office to handle.

The USPS increase in those business communications is impressive given that it wasn't that long ago that some were predicting the death of USPS junk mail at the hands of e-mail SPAM.

The rationale was that the dramatically lower per-message cost of SPAM would have companies pouring their mass messaging there.

But that hasn't happened, and Cochrane argues that there are a few reasons why.

Mostly, he said, the ease of e-mail spam may have been its undoing.

Consumers could instantly delete multiple spam messages and they would be gone, whereas junk mail—with its well-designed attractive imagery—often sits on kitchen tables for hours before being thrown out, periodically luring a curious consumer.

"E-mail and pop-ups are simply too easy to delete," he said. "When people solicit through the mail, the direct-mail companies, the advertising companies, they are looking for a good close rate. What's the response rate for spam? If you're going to sink dollars into a campaign, you're looking for a return on your investment."

An even brighter spot for the USPS this year is the package business, where tracking services and other options are improving.

E-commerce is sharply increasing the number of packages that are being shipped.

Many of those purchases would have happened at brick-and-mortar locations and picked up at the retailer, but they are now being shipped.

eBay is shipping packages that used to be the purview of garage sales, and it's typically using the USPS for those shipments, Cochrane said.

The USPS is also making some money leveraging its location-at-every-ZIP-code operation.

Package competitors DHL (DHL At Home), Fedex (SmartPost) and UPS (UPS Basic) are partnering with the post office for last-mile deliveries in certain situations where the Post Office can deliver it more cost-effectively than could the other package shipper.